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Picvest investors’ precarious position revealed

Nobody’s willing or able to say what’s happened to R3.5bn.

JOHANNESBURG – As Realestateweb delves further into the Picvest saga, more distressing information emerges. The latest discovery is that investors in the four most recent (and most valuable) syndications – Highveld 19 to 22 – do not own any property. This is a strange situation for a company whose motto is “Where property is the basis of wealth.”

There is a large amount of money at stake. The total value of the four syndications is R3.5bn. Most of this amount will have been funded by public investors, with a high concentration of senior citizens.  

The lack of ownership is confirmed in the most recent financial statements for the four Highveld syndications. Electronic copies of the financial statements are available to readers on request.

At this stage nobody is willing to tell Realestateweb why the relevant buildings have not been transferred to investors. The syndications Highveld 19-22 were sold to investors between January 2007 and August 2009. There has been ample time to transfer the properties.

It is clear that things did not go according to the plan laid out in the four relevant prospectuses.

Take, for example, the prospectus for Highveld Syndication 21 (also known as Tyger Manor Syndication). This is the largest syndication in the Picvest stable. It is based on 11 buildings with a claimed total value of R1.3bn.

The prospectus could not be clearer. It states: “The company will be the sole owner of the land and buildings.”

It continues: “As soon as sufficient funds are received by ‘Eugene Kruger and Co Attorneys Trust Account’, it will be utilised to enable the syndication to take occupation of the properties. These funds will be drawn on the instruction of PIC as per agreements between PIC and the investors. The unencumbered properties will be transferred into Highveld Syndication No. 21 Ltd.”

Picvest has previously told Realestateweb that Highveld 21 was fully subscribed. So why weren’t the buildings transferred to investors?

Highveld 21 director Ben van der Linde responds: “All the funds for the purchase of the properties were paid to Bosman & Visser. B&V have been put on terms by the directors of the public companies to transfer the properties. You should contact the directors of B&V to answer the question.”

Who is Bosman & Visser?

You’re not alone if you’re wondering how Bosman & Visser (B&V), a private company, fits into the Picvest picture.

The name Bosman & Visser does not appear in the Highveld 21 prospectus as a proposed recipient of investors’ money. A Cipro search reveals that is has two directors: Hendrik Jakobus (Rikus) Myburgh and Frederik Julius (Derik) Reichel. These two gentlemen are also respectively the CEO and financial director of Picvest.

According to Van der Linde, Bosman & Visser is owned by Myburgh.

The first Realestateweb heard of Bosman & Visser was last month when Picvest investors were told they’d have to expect a sharp reduction in their monthly income. The reason for the reduction? Property mogul Nic Georgiou simply turned his back on promises he supposedly made to “guarantee” Picvest investors’ income.

Georgiou’s company, Zephan Properties, is apparently in a dispute with Bosman & Visser, the nature of which, Georgiou allegedly claims, allows him to “cancel” his guarantees.

Georgiou plays an important role in Picvest’s products. Realestateweb has previously reported: “It is clear that almost every facet of an investment in PIC hinges on Georgiou. He sells the buildings to investors, leases them, guarantees them, and even sells the shares to investors via financial advisers.”

Unfortunately Rikus Myburgh, who was previously receptive to media enquiries, has recently gone to ground. He has so far failed to accept an open invitation to explain Picvest’s troubles on Moneyweb Radio. Similarly Myburgh has not accepted a request by this journalist to interview him and Georgiou on the latter’s apparent failure to honour his guarantees.

Myburgh has enlisted the services of public relations firm Fleishman-Hillard. Fleishman’s Kevin Welman tells Realestateweb that Myburgh “is prepared and wants to start engaging with the media more proactively but needs to communicate several things internally first”. He hopes Myburgh will start talking publicly before the middle of this week.

What do investors in Highveld 19-22 own?

The financial statements for Highveld 19-22 disclose the only assets of consequence that are owned by investors are loans to Bosman & Visser. Each syndication owns a loan to Bosman & Visser equivalent to the value of the syndication. The financial statements do not state whether these loans are secured by any assets.

The table below summarises the loans:


Prospectus expiry

Loan value



R 602,000,000



R 678,900,000



R 1,332,000,000



R 888,000,000


R 3,500,900,000

One of the questions Myburgh will need to answer is why his company owes R3.5bn to investors in Highveld 19-22. The prospectuses of these companies make no provision for investors to loan money to Bosman & Visser.

What about the other, healthier, syndications?

The syndications Highveld 19-22 account for roughly three quarters of the total Picvest portfolio. The remainder, about R1.1bn, is invested in another four, apparently healthier, syndications: Highveld 15-18.

The financial statements of these syndications disclose that investors do actually own buildings. These investors might not be in the same precarious position as those in Highveld 19-22 but they are by no means out of the woods.

Along with investors in Highveld 19-22, those in Highveld 15-18 were recently told that they would have to expect a reduction in their monthly income. The directors of all the Highveld syndication companies, Ben van der Linde and Morkel Steyn, recently admitted that the properties have not been earning enough money to meet the monthly payments that have been made to investors.

The syndication companies have been borrowing the shortfall from Georgiou. This is reflected in the financial statements of each syndication company as a loan from Georgiou’s company, Zephan Properties (formerly Zelpy 2095).

In other words, investors’ capital investment has eroded away as they’ve borrowed money from Georgiou to subsidise unsustainably high monthly payments to themselves. The underlying buildings simply couldn’t generate the income that was promised to investors.

This table summarises the value of buildings held in Highveld 15-18, as well as the money each syndication has borrowed from Georgiou.

Syndication name

Syndication value

Value in Results to Feb ’10

Loan from Zephan (Aug 2010)


R 253,000,000

R 196,000,000

 R                               10,304,000


R 309,000,000

R 234,000,000

 R                               56,141,000


R 232,220,000

R 188,000,000

 R                                 1,787,000


R 345,800,000

R 320,000,000

 R                                              –


R 1,140,020,000

R 938,000,000

 R                               68,232,000

From the table it appears that Highveld 16 is in the most trouble. It has borrowed R56m from Georgiou – nearly a quarter of the value of its buildings. Highveld 18 is in the best shape; in August last year, it had no loans owing to Georgiou.

Van der Linde says that the money was borrowed from Georgiou “to subsidise the income paid to investors and for money that Zephan advanced to the syndication companies to revamp and enhance some properties in the companies”.

He notes: “The loans are however subordinate to the shareholders’ loans and means that the loans from Zephan cannot be paid back unless the shareholders’ loans are repaid first.”

In other words Georgiou will only get repaid once investors are repaid the full R1.1bn they placed in Highveld 15-18 – something that is looking increasingly unlikely.

What can investors do?

Picvest investors who bought their shares from a financial adviser may consider a complaint with the Fais Ombud. The Ombud, Noluntu Bam, rules on whether advice dispensed by financial advisers was appropriate for their clients. If Bam finds that financial advisers did not provide good advice, she has the power to order that broker repay the amount that has been lost. A determination from the Ombud has the same strength as a court order.

Investors who were told that their income and capital were “guaranteed” may have a strong case against their adviser. As Realestateweb has previously reported, it was virtually impossible to determine the strength of Picvest’s “guaranteed” products. That’s because the balance sheet of the guarantors, Georgiou and associated entities, was not open to public scrutiny.

Similarly, investors who bought shares in Highveld 21 and 22 after March 2010 may have strong grounds for complaint. In March, it was reported by Realestateweb that the valuers for these two syndications, Carl Nel and Joe Knipe, had withdrawn their permissions for Picvest to use their valuations. Thus, there was no independent professional opinion to support what Picvest claimed the underlying buildings were worth. There was also strong evidence to suggest that the buildings were not worth what Picvest claimed. Financial advisers should not have sold shares in Highveld 21 and 22 without checking that the accuracy of the claimed building values.

Some readers have noted that it might be too early to lay a complaint with the Ombud because the extent of the losses has not yet been quantified. But with many syndication schemes it could take years to properly quantify a loss. That shouldn’t prevent an investor taking a valid complaint to the Fais Ombud. At worst, the Ombud could decide that the complaint is premature and hold it until a more suitable time. 

Complaining to the Ombud is free.

Investors might also consider joining together and sharing the costs of a lawyer to look after their interests. This was done by some Sharemax investors, although the success of this approach has yet to be determined.

Picvest investors will have to wait and see what proposals are presented to them by the boards of their companies. Investors may be wary of giving a proxy to financial advisers to vote on their behalf.

Investors were recently asked to consider a new scheme, which would involve replacing all the old guarantees with a new one. The new deal would see Georgiou (through a company called Orthotouch) buying all the buildings from investors for the full syndication value – R4.5bn. Repayment will be made over five years. Investors have good reason to be sceptical of this new deal, considering how easily Georgiou turned his back on the old guarantees.

Picvest’s shady beginnings

Picvest, formerly PIC Syndications, has its origins in the collapse of the DW Promotion, a company that sold property syndications to investors under the Oude Molen banner. The properties were liquidated and investors lost millions.

Deceased financial journalist and long-time Sharemax critic Deon Basson describes the history well in his book, Public Interest Warriors:

Basson wrote: “Oude Molen Properties No. 7 [the last syndication to be sold by DW Promotion] changed its name to Highveld Syndication No. 1 soon after incorporation in October 1998. The name change was the result of a family feud in which Willie Botha and Vernon Leas teamed up against Durand Botha.

“As a result of this DW Promotion practically closed its doors. The further result of the family feud was that Durand Botha started a new promotion entity named PIC Syndications, while Willie Botha and Leas started Sharemax.”

What caused the collapse of syndications sold by DW Promotion? Basson wrote: “…it transpired that Willie and Durand Botha and [Vernon Leas] had achieved massive profit margins through DW Promotion and an entity known as Prom Properties, by buying properties and then selling them to syndication companies at highly inflated values, a practice obviously detrimental to syndicate investors.

“In other words, they didn’t exactly find the foundations of their business plan in a text book on business ethics.”

PIC Syndications and Sharemax, the companies started by the two Botha brothers, went on to become the country’s largest property syndication companies. More than R10bn has been invested in their products over the past decade. To this day both Picvest and Sharemax remain FSB-licensed financial services providers.

Highveld No. 1 was a very modest syndication with a value of R1.2m. However, PIC Syndications went on to sell ever-larger syndications to investors. Its success was assisted by a boom in property prices.

In February 2007 Highveld syndications 1-14 were sold by their investors to Georgiou for a total price of R892m. The original total syndication value was R723m. All investors realised a profit.

A summary follows:



Syndication Value

Selling price

Highveld 1


R 1,200,000

R 1,963,948

Highveld 2


R 4,700,000

R 5,504,587

Highveld 3


R 6,000,000

R 8,486,313

Highveld 4


R 10,250,000

R 13,017,560

Highveld 6


R 22,000,000

R 33,582,000

Highveld 8


R 18,000,000

R 24,890,000

Highveld 9


R 54,000,000

R 68,438,960

Highveld 10


R 57,000,000

R 72,957,674

Highveld 11


R 76,000,000

R 91,609,604

Highveld 12


R 119,850,000

R 141,221,709

Highveld 13


R 234,130,000

R 288,618,188

Highveld 14


R 119,850,000

R 141,221,709

R 722,980,000

R 891,512,252

Soon afterward PIC Syndications changed hands. Durand Botha sold it, ostensibly to Myburgh, who became CEO in March 2008.

Although they were not sold to Georgiou, Highveld syndications 15-20 were marketed to investors under Botha’s watch. Myburgh’s name first appeared in the prospectus of Highveld 21, which was registered in May 2009.

Wirte to Julius Cobbett:


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